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A Forex Trading Plan Template

Posted by BluFX

 

Trading Plan Template

One of the challenging things about trading can be putting together a forex trading plan template and sticking to it, especially if you're new to the game. Where do you start? How detailed should it be? If you're struggling with that last question, then this beginner's guide to the trading plan template is just what you need! We'll show you how to put together your own, as well as give some tips on using pre-made plans as your starting point!


Read Women in Trading: Kim Krompass Q&A ⟶


Your Forex Trading Plan Template

What is a Forex Trading Plan?

If you are new to trading, you may not know that all traders need a trading plan. A forex trading plan is simply an outline of your strategy for each trade you take. Without one, it can be hard to stay disciplined and follow through with your trades. Your plan should include everything from entries and exits, how much risk you're willing to take on, and so on.

Read the Ultimate 8-Step Trading Plan Checklist>> 

Benefits of Having a Forex Trading Plan Template

A trading plan will help traders maintain a solid and consistent approach to trading that can lead to profits. Creating and following a detailed and well-thought-out trading plan is an essential part of successful trading. There are several reasons why planning your trades will help you become a better trader.

First, having a forex trading plan template provides some structure for your daily practice, essential in becoming a professional. Practicing without a defined goal or target leads to aimless wandering and may not be as beneficial as it appears at first glance. 

Second, creating your custom trading system from scratch takes time and patience while also challenging at times. It is only natural that every new trader will have a few bumps along their learning curve as they figure out what works for them and what doesn't. Having a plan in place gives you an idea of how you should be using specific tools or indicators which can help speed up your progress significantly.

Here's how to trade profitably on a BluFX account>>

Sample forex trading plan template 

Forex trading plans are necessary because they outline your goals, strategies, and ways to measure success so that you can focus on improving your trading skills over time. Here's an example of a simple trading plan outline that you can customize for your own needs or use as a starting point in building your forex trading plan.

Goals

What are you trying to accomplish? What are your short-term, mid-term, and long-term goals? You should have some quantifiable goals for each of these categories. 

Example:

  • Short-term goal: I want to make 10 forex trades by September 1st. 
  • Mid-term goal: I want to be consistently profitable by December 31st. 
  • Long term goal: I want my net worth to increase by $10,000 by June 30th next year through forex trading alone.

Read about five traders for career inspiration and motivation>>

Risk Management

Risk management involves creating a plan for handling fluctuations in your account balance and minimizing or eliminating the findings of common problems within the industry, such as overtrading and lockouts. 

Example: My trade risk will be 1% of my current trading capital. I will trade only in the four major currency markets to eliminate too much market/political/central bank influences from my analysis and investing process. 

Read risk-reward ratio: a guide here>>

Entry Rules

A set of entry rules will give the trader precise instructions on when to enter a short or long position.

Example: I will take all steps to ensure that the order is executed at the best available price. If I didn't achieve my entire share lot, I will monitor the market activity at the current bid price and seek to add liquidity by buying the remaining shares.

Read how to overcome fear of loss in trading>>

Exit Rules

A simple rule states that if a position has a loss of a set amount, it should be closed. The same is true for profits. At this point, it becomes a pending order to exit the trade.

Example: I will take half of my profit once I hit a good support level, which must be two times the risk. I'll take the other half as soon as I see confirmation that the trend has ended. If I reach the ultimate target, I won't do anything because I made my money!

Read our guide to how to avoid drawdown on your account>>

Time frames and markets

The time frame you choose will determine the kind of day trader you'll become. Are you an active day trader? If so, you need to understand the role of the 1- minute, 5-minute, and 15-minute time frames in your trading.

Example: After learning some basic strategy and technical analysis, I will be watching forex markets daily and looking for market set-ups.

Read what time does the forex market open?>>

Strategy

A strategy outlines a systematic approach to take advantage of the forex market opportunities. It serves as a model for trading. An outline of a system will help you create the best plan that will benefit you in both the short run and long run.

Example: I want to make sure I'm taking advantage of every opportunity. So I'll keep an eye on the short-term trends while regularly scanning for longer-term options. Once I find some consistent results, I'll try doubling down on these opportunities.

Which strategy is right for you? See what kind of strategy suits your day job or your personality here>>

Set-ups

Set-ups are crucial to creating a successful forex trading strategy. These are the conditions that must exist for a trade to become profitable.

Example: I will look for two patterns: 1) bases or breakouts near the 20-period moving average (20MA), 2) pullbacks to minor support (rising 20 MA).

Make sure your technical analysis is up to speed. Read our blog on all things technical analysis here>>

Pre-market routine

The purpose of this routine is to take care of all the little things before the market opens. This routine will also take a little longer, which means you should start it at least 1 hour before the market's opening time.

Example: When I log in to my trading platform, I like to take a step back and consider the market's current direction. Is there anything I can trade? I then review earnings reports and load any potential trades into my Long and Short watch lists. I also set alerts near these projects.

Before you trade: read the ultimate trading mindset checklist>>

Post-market routine

Start this checklist to ensure you set trades to meet your goals when the market closes each day.

Example: I will check my journal and note the trades I made and the signals followed. I will go through everything with a fine-tooth comb, looking for errors or anything I can improve on. 

Read: How to Find Forex Strategies to Suit Your Day Job ⟶

Tags: Trading plan

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